Finding Common Ground: Is This Document the Answer to the Net Metering Debate?

CHICAGO --
One of the problems with the increasingly contentious debates over net metering is that both sides often apply different calculations to compare the value vs. costs of distributed solar energy. Now a new report seeks to be a roadmap that everyone can use to lay out a framework for calculating costs and benefits of net metering, and hopefully get everyone starting from the same point.

It offsets combined-cycle natural gas facility, which should be factored in as an avoided energy cost

Installations are predictable and should be included in utility forecasts of capacity needs, and credited with a capacity value upon interconnection

Valuations of societal benefits should be included, such as job growth, health benefits, and environmental benefits.

Studies in California and Vermont have concluded that net metering's annual benefits to ratepayers outweigh costs. But other states from Arizona to Texas have applied varied assumptions (and omissions) to come up with different conclusions about the costs and benefits of DSG. The upshot: there's been a glaring need for a common set of methodologies and process transparency. Are utilities including how net metering can help them defer of costs such transmission and distribution (T&D) investments, and how does that offset any lost revenues? What about putting a value on how solar DG can make storm outages less severe to all customers?

These debates may come up with different final values, but "we should be able to approach it with the same methodology," said Karl Rábago, principal of Rábago Energy and co-author of the study, in an interview just before Solar Power International. "It'd sure be handy to have a single document" that laid out best practices for analyzing the value of solar, echoed co-author Jason Keyes, partner at Keyes, Fox & Wiedman LLP.

At its heart, the report lays out a "cost and benefit unbundling" of the attributes and costs for solar generation so that they can be more easily understood, according to Rábago. "We say there's a value over there you're ignoring, or a cost you're tolerating, and they're both wrong. We can make a business plan out of harvesting that value and eliminating those costs," added Keyes. At the same time, the authors do think that net metering can be structured so that utilities "are made whole" while maintaining a level of simplicity. Maybe it'll look more like a value-of-solar-tariff (VOST) that Austin Energy determines, or maybe it'll be more adjusted to some other form of net metering.

The primary target audience for this document is regulators, who have a key role in "establishing guardrails" for how states value DSG, they explained.

"Utilities have always used avoided costs as a way to keep renewables from being implemented," such as basing them on baseload resources to translate to much higher comparative costs, points out Lee Peterson, senior tax manager with CohnReznick. This study points the way to a "huge democratization" that lays out the factors for cost/benefit analysis for everyone to see and apply. "Like it or not, it's impossible for utilities to ignore this stuff and give it no value," Peterson said. "The day is coming a lot sooner than anyone thought as far as acceptance of distributed generation."

This new IREC study, paired with a recent one from the SEIA and SEPA, creates a body of literature showing the importance of including "a whole slew of positive attributes in addition to alleged costs" to assess DSG on the grid, Peterson said. Forget the uphill fight of convincing utilities to look at DSG because of state-mandated renewable portfolio standards (RPS); now even states without an RPS such as Georgia, South Carolina, and others can examine and justify DSG based on its merits. "That's a huge step from where the industry was even two years ago," he said.

Moreover, the skill base developed through an agreed-upon methodology will apply to other important issues down the line, from energy storage to load management and smart grid. "We need to understand dynamic resources at the distribution edge," Rábago said. Blending on-site solar PV with demand response and energy efficiency, "that's going to be the next step," Keyes added. And those further analyses of those types of resources "would benefit a great deal by this component-by-component analysis."

"Every now and then, big things move through the electric utility industry," Rábago said. Distributed resources seem to be heading this way as they become more affordable and desirable by customers and stakeholders. "Inside utility companies there's a realization that these [distributed] resources are going to be more and more a part of their lives." Once valuation methodologies can be agreed upon, "the kinds of calculations left are the ones that are in the end public and open."

7 Comments

An excellent report. We should also factor in that Solar makes their power during the peak time of day and uses the excess that may get dumped at night since most power plants can't ramp down and utilities have no storage. Also the savings on water since solar PV uses none and makes no pollution while COAL, NG and Nuclear all boil water that evaporates. This is why Nuclear plants are normally located on lakes and rivers.

The Southwest is in the midst of a record drought, some 14 years in the making, which means the water supply for many Western states - California, Arizona, Utah, Nevada - is drying up. Last month the Bureau of Reclamation announced they're cutting the flow of water into Lake Mead, which has already lost 100 feet of water since the drought began.

What happens if the Southwest drought does not end soon?

Will we keep using 3 to 6 million gallons of Clean Water per Fracked well, to extract natural gas?

This petition will ask the California Regulators and Law makers to allocate Renewable Portfolio Standards to Ca. home owners, the RPS is the allocation method that is used to set aside a certain percentage of electrical generation for Renewable Energy in the the State.

The State of California has mandated that 33% of its Energy come from Renewable Energy by 2020.

The state currently produces about 71% of the electricity it consumes, while it imports 8% from the Pacific Northwest and 21% from the Southwest.

This is how we generate our electricity in 2011, natural gas was burned to make 45.3% of electrical power generated in-state. Nuclear power from Diablo Canyon in San Luis Obispo County accounted for 9.15%, large hydropower 18.3%, Renewable 16.6% and coal 1.6%.

There is 9% missing from San Onofre and with the current South Western drought, how long before the 18.3% hydro will be effected ?

Another generator of power that jumps out is natural gas, 45.3%, that is a lot of Fracked Wells poisoning our ground water, 3 to 6 million gallons of water are used per well. If Fracking is safe why did Vice Pres Cheney lobby and win Executive, Congressional, and Judicial exemptions from:

Clean Water Act.

Safe Drinking Water.

Act Clean Air Act.

Resource Conservation and Recovery Act.

Emergency Planning Community Right to Know Act.

National Environmental Policy Act.

"Americans should not have to accept unsafe drinking water just because natural gas is cheaper than Coal. the Industry has used its political power to escape accountability, leaving the American people unprotected, and no Industry can claim to be part of the solution if it supports exemptions from the basic Laws designed to ensure that we have Clean Water and Clean Air" Natural Resources Defense Council.

We have to change how we generate our electricity, with are current drought conditions and using our pure clean water for Fracking, there has to be a better way to generate electricity, and there is, a proven stimulating policy.

The Feed in Tariff is a policy mechanism designed to accelerate investment in Renewable Energy, the California FiT allows eligible customers generators to enter into 10- 15- 20- year contracts with their utility company to sell the electricity produced by renewable energy, and guarantees that anyone who generates electricity from R E source, whether Homeowner, small business, or large utility, is able to sell that electricity. It is mandated by the State to produce 33% R E by 2020.

There is currently 3 utilities using a Commercial Feed in Tariff in California Counties, Los Angeles, Palo Alto, and Sacramento, are paying their businesses 17 cents per kilowatt hour for the Renewable Energy they generate. We can get our Law makers and Regulators to implement a Residential Feed in Tariff, to help us weather Global Warming, insulate our communities from grid failures, generate a fair revenue stream for the Homeowners and protect our Water.

Why it is better to own your own Renewable Energy System

"The benefits of owning a renewable energy system far outweigh the benefits of a lease or a power purchase agreement (PPA). Under the American Recovery and Reinvestment Act of 2009, homeowners are eligible for a federal personal income tax credit up to 30% of the purchase cost of their renewable energy system, without a maximum limit.** Homeowners can utilize the incentive money in any way they choose. But homeowners that choose to lease their systems turn over their rebates and incentives to the third party lease or PPA companies associated with the solar systems installed on their homes."

"The owner of a renewable energy system is also sheltered from rising electricity costs, which have historically increased on average of 3-5% each year. This presents homeowners with opportunities to save money each month on energy and also reduces their reliance on third-party utility companies. By purchasing a renewable energy system with cash or through a loan, a homeowner can completely pay off his or her system and then independently produce clean energy.

By choosing a lease or a PPA option homeowners are essentially substituting their utility companies with third-party leasing companies. Additionally, homeowners will likely be required to purchase their systems, renew their leases, or have the systems removed from their roof and revert to paying utility rates once their leases have ended." Charlie Angione.

"There’s absolutely no such thing as a $0 down solar lease or PPA and here’s why. A requirement of both of these financing programs is that you agree upfront to give the leasing or PPA company your 30% federal tax credit which is worth thousands of dollars as well as any other financial incentives.

At $5.57 per Watt. a 6 kW solar system would yield a federal tax credit of $10,026!

With a $0 down loan instead of a lease, you’ll get to keep the 30% federal tax credit as well as all other applicable financial incentives for yourself and you’ll own your solar system instead of renting it, for a much greater return on investment.

And if you do decide to lease instead of own, good luck ever selling your home with a lease attached to it. What homebuyer will want to purchase your home and assume your remaining lease payments on a used solar system on your roof, when they can buy and own a brand new system for thousands less." Ray Boggs.

We also need to change a current law, California law does not allow Homeowners to oversize their Renewable Energy systems.

Campaign to allow Californian residents to sell electricity obtained by renewable energy for a fair pro-business market price. Will you read, sign, and share this petition?

http://signon.org/sign/let-california-home-owners

Individuals and farmers own 46% of renewable energy production in Germany.

ANONYMOUS
October 26, 2013

Hope springs eternal that 'mom & pop' generating plants using hydro, solar, wind and other can be built 'out back' and sell the power generated to utilities i.e. a grid connect or to neighbors.

Whether a 500 KW solar array or a 10 KW hydro turbine, excess power generated in Maine can only be credited up against a 'customer's power bill on a 12 month cycle. If the credits for power submitted to the grid aren't used, the account resets to zero.

The current dream is to invest in a solar generating plant and 'sell' i.e. 'profit' power to sub accounts i.e. tenants in an office or apartment building. In Maine this illegal under PUC policy, but with the advent of NET ENERGY BILLING the dream lives on.

As everyone should know any grid generator needs to be approved by the utility company and the PUC, and this is very different than putting panels on your barn and credit power produced against your bill.

You can consult the 'NET BILLING' policy on the website of either Bangor Hydro, Central Maine Power, or the Maine PUC.
....and as a microhydro dealer I am adding in social value to my presentations as well. thanks for the methodology!

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Jim is Contributing Editor for RenewableEnergyWorld.com, covering the solar and wind beats. He previously was associate editor for Solid State Technology and Photovoltaics World, and has covered semiconductor manufacturing and related industries,...